Financial markets include various styles of trading, such as intraday, swing trading, positional trading and scalping. Traders who engage in scalping trades are known as scalpers. Major trading strategies are implemented by institutional and retail traders. Basically, scalping refers to quick small reversible transactions. In this article, we will discuss scalping trading strategies in detail.
What is BankNifty Scalping Trading?
This strategic trading mainly focuses on intraday trading and also on quick short-term profit. The objective of this trading is to limit the risk factor by taking a small profit repeatedly. It has gained popularity among professional short-term traders.The Scalping techniques make an less difficult manner to trap the small rate movements withinside the inventory market.As it offers with small rate changes, buyers want to be very strict and focus on the go out strategy. A large gap in price may cause a big loss because in this type of trading traders basically invest a huge amount of money.
Scalping in the equity market is trading with a fast movement with a very fast technical analysis.The intention of scalping is to make a short earnings through shopping for or promoting shares or commodities or indices and preserving the buying and selling time very short and fast. Scalping traders can trade many trades in a day with quick succession. They close one trade and wait for the entry of another trade. Sometimes even there is a mere 5 minutes time gap between two trades. Scalping trader actually trades quickly for a small profit from the particular trade.
BankNifty Scalping Strategy 1
Understanding Scalping
So we understand that a scalping trader needs to be very fast and agile. That means they have to learn scalping techniques. If you are a new trader, don’t try scalping on your first day of trading. Otherwise your hand will be burnt and damaged. If you are a new trader, start with local trading first. Once you get familiar with positional trading you can gradually start intraday trading. Once you can successfully make 2 to 4 trades a day, then you can gradually try scalping.
A scalping trader can make 40 to 50 trades a day. There are traders who do 40 trades per day and take profit of Rs 250, totaling Rs 10000 per day as profit. So you can easily understand how fast a scalping trader needs to be.
The Aim of Scalping
The objective of scalping trading is actually to take a small profit with a small stop loss and a small target and take the profit home quickly. Show the scalping trader the need to open trades and close trades very quickly. For scalping traders, they must have a very low brokerage plan.
Because if a scalping trader does not have low brokerage and if he takes N number of trades in a day, he will eventually have to bear the loss of the brokerage plan. So I suggest those scalping traders to go to a discount broker like Zerodha or Upstox where they can get a brokerage plan as low as Rs 20 per executed order.
Features of Scalping Trading
- Since traders have to focus on the finer details of price action, having the right tools like live data feeds and live access brokers is paramount.
- Scalping trading theory is completely different from the “let your profits run” mentality. Scalpers tend to take as small profits as possible.
- To survive in this trade, traders need to have high focus and quick decision making ability. A fraction of the time can lead you to bigger profits or bigger losses.
- The use of scalping is more valid when there is high volatility in the market
Scalping Trading Strategies
- Scalpers should look for high volume stocks for this trading,
- Here, proper entry and exit timing is very important, most trades depend on this strategy.
- Investors should be very careful and focused while scalping as a fraction of a second matters here.
- Chances of damage are high here. So traders prepare themselves for these types of trades.
- The best strategy in this trading is to use the oscillator. Stochastics and Bollinger Bands are the most widely used technical tools for scalping trades.
- Support and resistance are other important factors in scalping.
- Try to make one trade at a time. Most successful scalpers follow scalping trading strategies.
BankNifty Scalping Strategy 2
Scalping Trading in Nifty Future
Nifty is a very popular tool for Indian scalping traders. Suppose, a trader opens a trading order for 10 contracts of Nifty futures at a market value of 5000. With a discount broker, he can even book a profit of 4 to 5 points. So for each trade, he is getting 5 points times 75 which is a nifty lot size. He is getting Rs 375 per lot from each trade. If brokerage and taxes are deducted, he is finally making Rs.350 profit per lot, per trade.
So per trade, a trader is making a profit of Rs 3500 for 10 contracts. So if he does 10 trades in a day then finally he gets 35000 rupees profit that day. There are several scalping strategies that a trader can use.
Tools and Indicators for BankNifty Scalping
Moving Averages
Moving averages help identify trends and potential reversal points, serving as dynamic support and resistance levels.
Relative Strength Index (RSI)
The RSI indicator indicates overbought or oversold conditions, assisting traders in identifying potential trend reversals or continuation patterns.
Bollinger Bands
Bollinger Bands provide insights into volatility and price levels, aiding in identifying entry and exit points based on deviation from the mean.
Common Mistakes to Avoid
To maximize the effectiveness of BankNifty scalping strategy, traders should avoid the following common mistakes:
- Overtrading: Excessive trading can lead to increased transaction costs and diminished returns.
- Ignoring Market Trends: Failing to align with prevailing market trends can result in losses.
- Failing to Set Stop-loss Orders: Neglecting to set stop-loss orders can expose traders to significant downside risk.
FAQs: Clearing Common Doubts
Q: Is BankNifty Scalping suitable for beginners?
Absolutely, but beginners should start with caution. A solid understanding of market dynamics and risk management is crucial before diving into scalping.
Q: How much capital is needed for BankNifty Scalping?
The capital required varies, but it’s advisable to start with an amount you can afford to lose. As a rule of thumb, risk no more than 1-2% of your trading capital on a single trade.
Q: Can I scalp with a full-time job?
Yes, BankNifty Scalping can be adapted to a part-time schedule. However, ensure you can dedicate focused time during market hours.
Q: What role do emotions play in scalping?
Emotions can impact decision-making. Successful scalpers cultivate discipline and emotional control to navigate rapid market changes effectively.
Q: Are there specific market conditions ideal for scalping?
Volatility is favorable for scalping. Traders often thrive in active markets with frequent price movements.
Q: How do I choose the best broker for BankNifty Scalping?
Opt for a broker with low fees, reliable execution, and a platform that supports rapid trade entry and exit.
